Wednesday, August 10, 2011

Chairman Bernanke's August 9th. Comment is Confusing

The Fed chair stated that the FOMC will hold interest rates at zero through 2013. The free market however, will likely see greater price inflation due to the Fed's massive increases in money supply. Studies looking back to 1913 reveal that interest rates tend to track inflation.

That said, even if the Fed holds rates low, it is hard to understand how interest rates throughout our economy can remain low going forward. The FOMC Jackson Hole, Wyoming meeting later this month may shed more light on the strategy. Stay tuned.

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